Correlation Between Citigroup and Warehouses

Can any of the company-specific risk be diversified away by investing in both Citigroup and Warehouses at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Citigroup and Warehouses into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and Warehouses de Pauw, you can compare the effects of market volatilities on Citigroup and Warehouses and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Citigroup with a short position of Warehouses. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Warehouses.

Diversification Opportunities for Citigroup and Warehouses

-0.89

Correlation Coefficient

Citigroup  Warehouses

Pay attention - limited upside

The 3 months correlation between Citigroup and Warehouses is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Warehouses de Pauw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warehouses de Pauw and Citigroup is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Citigroup are associated (or correlated) with Warehouses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warehouses de Pauw has no effect on the direction of Citigroup i.e., Citigroup and Warehouses go up and down completely randomly.

Pair Corralation between Citigroup and Warehouses

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.36 times more return on investment than Warehouses. However, Citigroup is 1.36 times more volatile than Warehouses de Pauw. It trades about 0.33 of its potential returns per unit of risk. Warehouses de Pauw is currently generating about -0.08 per unit of risk. If you would invest  6,235  in Citigroup on September 4, 2024 and sell it today you would earn a total of  907.00  from holding Citigroup or generate 14.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Warehouses de Pauw

Citigroup

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Warehouses de Pauw

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Warehouses de Pauw has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Citigroup and Warehouses

The main advantage of trading using opposite Citigroup and Warehouses positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Warehouses can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Warehouses will offset losses from the drop in Warehouses' long position.

The idea behind Citigroup and Warehouses de Pauw pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.